The Current Sustainable Development Practices of Financial Sector in UAE: the Case of Insurance Industry

Abstract

To achieve sustainable development in the financial sector, such as banks, insurance firms, investment companies, accounting firms, etc., is of critical given their role in economic development of countries. The objective of this research is to investigate the current sustainable development practices of the financial sector in UAE. Originally, the banking and insurance sectors were targeted but only insurance responded positively. Therefore, the focus was on the sustainable development practices of insurance sector of UAE. The methodology used in this study was designing a survey questionnaire that included questions related to: Awareness of insurance companies to environmental issues; Environmental Leadership; Internal Environmental Practices; Climate Change, Global Worming and Environmental Concerns; Strategies to Mitigate Environmental Effects; Engagement with External Stakeholders; Improving Business Opportunities; and Potential Stewardship Role. The survey targeted 60 UAE insurance companies but only 56 responded. The results indicates that there was increased awareness of insurance companies to environmental issues, who showed energy saving culture and proper water usage. Legislation, environmental groups and advances in technology were found as most important environmental awareness drivers. In addition, insurance companies showed that they are more proactive when it comes to environmental concerns. The majority of companies have ISO 9001 certifications but lack in ISO 14000, ISO 26000 and ISO 50000. Insurance firms are yet to endorse the UNEP Statement that would benefit the organization. The majority fear global climate change and believe that its consequences might create new concerns. Companies need to work more closely with their clients to avoid environmental catastrophes, manage risks and offering them recommendations. Insurance companies are exposed financially due to environmental consequences. They need cooperate more with all their stakeholders such as government agencies, environmental groups and climate scientists to study environmental issues. They are also facing difficulties in predicting future consequence of increasing unpredictable climate. But, they believe that curbing the GHG emissions and mitigate their risk is as important as taking actions to limit environmental damages. In absence of environmental action plan, insurance still believe environmental problems and challenges suggest new business opportunities to secure ‘environ-technology’ market niche. In addition, insurance firms can influence the financial community to effect structural changes, lobby for and effectively influence public policies. Nevertheless, environmental degradation and man-made catastrophes threaten the insurance industry. Additionally, the increase and tightening of environmental regulations affect insurance businesses. Finally, insurance firms believe that preventive action is economically viable over wait-and-see policy.

Date of Award	Dec 2014
Original language	American English
Supervisor	Toufic Mezher (Supervisor)